Yup! It’s that time of year again. Football season! Love it or hate it, we are in for several months of highs and lows (depending upon your favorite team), fantasy football and tailgate parties. So, before we get fully into the season, let’s examine how football is impacted by state tax laws.
The biggest state tax implications are arguably at the professional athlete level. As the attached article, indicates, millions of dollars are at stake not only for the states in which those athletes reside, but also in the states in which they play, practice, train or attend meetings. It all gets back to nexus and proper allocation of revenues to the states in which earned. What is nexus? As we’ve discussed, it’s the minimum contact that an entity (or individual) must have with a state in order for the state to be able to assess taxes. As players spend time “on the clock” in various states, they indeed cross the line of that minimum connection and thus are required to file individual income tax returns in those states. But on what income base? Overall income is allocated based upon the number of days “worked” or “duty days” in the state, divided by the total number of duty days. The days by state will obviously vary by player. Most days will likely be allocated to a player’s “home state”, but each trip to another state will likely yield at least a couple of days of allocation there. Players making their homes in states which don’t have an individual income tax (think the Seattle Seahawks, Miami Dolphins, and my favorite Dallas Cowboys) will be in a better position than their counterparts playing in high tax jurisdictions like the San Francisco 49ers, Oakland Raiders and San Diego Chargers. Luckily most players (or their managers) hire CPAs to assist with those filings! Hopefully, they’ve gotten all those returns filed timely and aren’t relying on extensions to October 15th, when we’ll truly be in full swing of the season.
Staying with the income tax consequences, note that the teams themselves (corporate entities) will also be required to apportion income to states in which they play.
What about sales tax? A few fun things come to mind as we think about consumers engaging in the football experience on a weekly basis:
- Going to join us at the new Levi’s Stadium this year – either for regular season games or for the “Big Game” in February (hey I don’t want to get a copyright infringement)? You’ll be able to get a beer and other food concessions for a nice round number. Sales tax is already included in the purchase price. The key for the team is that the policy must be stated at the venue so that customers are aware that it is included. Then, upon filing their sales tax returns, the team will have to properly report the included tax. Here is an article that gives you a snippet of the beverage prices at Levi’s Stadium.
- Buying some cool new football jerseys online? If the seller doesn’t charge you sales tax (they may or may not – depending on where they have nexus), make sure you self-report and pay the use tax on your individual income tax return (along with all the other use tax you didn’t pay on other purchases throughout the year!)
In a nutshell – enjoy football season. Don’t spend too much time dealing with the actual state tax issues – you can just enjoy your tailgating. Call us for help navigating state tax issues. We’ll take your call if I’m not watching the Cowboys! Enjoy! And we’ll see you at the Big Game in Santa Clara in February!
